DTN Early Word Opening Livestock

 
Cattle: Steady Futures: Mixed Live Equiv $134.29 -0.29* 
Hogs: Steady Futures: $1 Higher Lean Equiv $84.57 -0.31**
* based on formula estimating live cattle equivalent of gross packer revenue
** based on formula estimating lean hog equivalent of gross packer revenue

GENERAL COMMENTS:

Following steady to $1 per cwt higher cash cattle trade which developed through the end of last week, both sides are expected to go back to a typical Monday routine of inventory taking and show list distribution. This is likely to bring about increased overall support activity later in the week, but bids and asking prices are not expected until midweek or later. Futures trade is focusing on the back and forth shifts seen during the first week of October. This is likely to bring about some additional uncertainty through the complex, as traders may focus on the potential to follow cash market higher early in the week.

Sharp futures gains which developed Friday has helped to offset earlier market concerns of further market weakness. The back and forth in the complex during last week is likely to add some additional volatility to the market over the next couple of weeks with outside markets playing a wider role in the overall direction of livestock market trade. Early support is expected to be seen through the complex, although any buying activity will be met with caution given the overall lack of direction and volume early in the week. Cash hog markets are expected to remain generally steady with early bids expected to be seen $1 lower to 50 cents higher, although most bids are expected to be steady to weak.

	BULL SIDE		BEAR SIDE
1)	Cash cattle support last week is expected to help stimulate firmer asking prices and likely bring about renewed resolve from feedlot managers through October.	1)	The continued inability to stabilize beef values in the boxed beef cutout report is adding concerns to the complex, as all the firmness in cash and futures trade is eroded if product can't be sold at a higher price.
2)	October live cattle futures remain at $113.80 per cwt, near long term resistance levels. This is expected to help spark some additional underlying buyer support over the near future.	2)	Live cattle futures continue to be the follower in the market over the last week, with very limited market direction seen compared to feeder cattle trade. This may add to more market apathy through the early part of the week in most live cattle futures.
3)	Lean hog futures have bounced back with aggressive underlying support late last week. This has offset the expectation of a long-term market loss that may have been developing through the end of the year.	3)	Despite the late-week rally in lean hog futures, cash hog values remain stuck in the same rut seen over the last couple of weeks. The inability to lead markets higher in the cash markets puts pressure on long term lean hog market support.
4)	Summer 2019 lean hog contracts continue to hold a significant market premium to the October and December future with the focus on continued supply management and strong expected demand through the complex long term.	4)	Support in pork values has been extremely uncertain through the last few days with individual primal cuts shifting in a mixed and wide price range. This lack of consistency through the market could bring about some additional volatility and lack of direction that could bleed into the rest of the complex.

Rick Kment can be reached at rick.kment@dtn.com

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